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Technology Stocks : Cabletron Systems (CS: NYSE)
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To: Doug who wrote (2566)12/5/1997 3:11:00 PM
From: B.G. Galbraith  Read Replies (2) of 8358
 
I don't think the stockholders would tolerate a buyout right now. The price is too low for them to make a premium on their investment with any offer premium short of more than twice current price. Who would pay that premium?

I do think that the key to this company's future is the CEO. They are still making money, have good products in the production cycle, are in excellent financial condition according to their balance sheet, and can affort additional acquisitions after the DEC networking Purchase.

An aggressive CEO would go for more acquisitions to round out their product line and concentrate on improving their sales force and supplier-consumer relations. He would also cut some fat from their overhead costs.

If it was certain that Reed could do these things, I would be buying a lot more stock at these prices. He needs a year to show if he has the right stuff. Long at 29 and maybe buying more after earnings are out.

BG
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